Sberbank cashes in as government looks to inject into smaller banks
Sberbank has revealed better than expected half-year profits, despite warnings the credit crisis has spread to Russia's biggest bank and its rivals. The news comes as the government changes the law to stop its loans being hogged by state giants Sberbank.
Sberbank claimed it would hit full-year profit targets of almost $5 Billion dollars after topping $2.5 Billion for the first half under International Financial Reporting Standards. As, by far, the biggest state bank, Russian consumers spooked by the crisis may flee to it, from private rivals, according to Bob Kommers, Economist at Deutsche Bank
“Once people feel less confidence they will probably put their money at Sberbank rather than at smaller banks.”
On Monday the government began issuing unsecured loans direct to 120 Russian banks. It had channeled previous injections through state giants Sberbank, Gazprombank and VTB, but Richard Hainsworth, CEO of Rusrating, says these haven't lent on to cash-strapped smaller rivals as hoped.
“Now the Central Bank has the legal right to operate directly with any banks that meet their criteria, that's a big change.”
Most experts predicted that far from suffering in the crisis Russia's top banks would use their cashpiles to buy weak rivals. Now Russia's number two VTB has frozen costs for a year and is begging the government for more loans after losing an estimated $300 million on securities in September alone.
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